In the community at large, many older adults with minimal cognitive and functional impairment remain stable or improve over time, unlike patients in clinical research settings, who typically progress to dementia. Within a prospective population-based study, we identified neuropsychological tests predicting improvement or worsening over 1 year in cognitively driven everyday functioning as measured by Clinical Dementia Rating (CDR). Participants were 1682 adults aged 65+ and dementia-free at baseline. CDR change was modeled as a function of baseline test scores, adjusting for demographics. Among those with baseline CDR = 0.5, 29.8% improved to CDR = 0; they had significantly better baseline scores on most tests. In a stepwise multiple logistic regression model, tests which remained independently associated with subsequent CDR improvement were Category Fluency, a modified Token Test, and the sum of learning trials on Object Memory Evaluation. In contrast, only 7.1% with baseline CDR = 0 worsened to CDR = 0.5. They had significantly lower baseline scores on most tests. In multiple regression analyses, only the Mini-Mental State Examination, delayed memory for visual reproduction, and recall susceptible to proactive interference, were independently associated with CDR worsening. At the population level, changes in both directions are observable in functional status, with different neuropsychological measures predicting the direction of change. (JINS, 2010, 16, 761–770.)